Saturday, February 5, 2011

RC: Should WE Have a Debt Management Plan?

I came across a timely article in the Tennessee County Services Association publication COUNTY NEWS: “Debt Management Plan Available For Use By Tennessee Local Governments”

I find this article most interesting in our ongoing conversation as relates to tax increases, re-structuring our debt…and, well, it stops right there because there has not been a conversation (that I have formerly seen by the Budget Committee, or otherwise) about the budget. Now, I know that it is not the “time” to discuss the budget per our calendar. I just stand in awe at how government processes work where we are told that a tax increase is coming this year without taking a look at the management of what we spend.

And (for now), that will be all of my discussion of where we are in this discussion.

Here is where you can find the article. Here is what I find interesting:

Local governments in Tennessee now have a debt management policy model they can mirror as they borrow money in the future.

The next time any of you see your commissioner: ask them what your Robertson County policy is….

Here is a discussion of what that model policy stands for:

The model policy urges Tennessee governments to follow four guiding principles while developing their own policies:

1) Debt transactions should be clearly understood by the decision-makers

2) Citizens should be able to get clear explanations about transactions

3) Steps should be taken to avoid conflicts of interest among the parties involved in transactions

4) Costs and risks associated with transactions should be clearly disclosed

The model policy contains some minimum requirements for governments.

I have tried to share the word about the massive re-structuring of debt the RCC is considering at this time. Per example in Robertson County, let’s look at an example provided within the article:

For example, deferral of debt payments is only allowed if specific justification is provided – and no payments of principal or interest may be extended beyond the useful life of any asset financed through debt.